New accounting standard could have a huge impact on your business – starting now!
Some say it’s the largest overhaul to GAAP accounting in decades. The new FASB revenue recognition standard became effective for public companies last year. Now it’s effective for private companies, too – meaning it must be applied and reported on December 31, 2019 financial statements.
If you’re not prepared, you could have a serious problem. That’s why it’s important to review your primary contracts now, so you’ll know what your financial statements will look like under the new requirements.
Since the standard could affect the timing and amount of revenue recognized, it could create new assets and liabilities – impacting loan covenants and other financial ratios. Your financials may look different and will require more disclosures. New processes and controls will be required to properly account for and disclose revenue from contracts with customers.
Tech companies, in particular, should be prepared, since they often rely on complex technology and customer licensing agreements.
If you have any questions regarding the effects of the new standard on your business,
please contact an LWBJ audit professional.